How Do Financial Wellness Programs Benefit Employees?

On December 10, 2017, Shayron “Shay” Trostel was driving her 1994 Jeep when another car collided with hers at 55 miles per hour, sending her into a spin — literally and figuratively. Trostel’s doctors continue to assess the damage to her knee and back, and her car was totaled. She lost 10 days of work as a bartender, server, trainer and bookkeeper at BJ’s Restaurant and Brewhouse in Arlington, Texas, missing out on an estimated $175-$250 per day, she said.

To help their employees in times of need, BJ’s has a Give A Slice program, which employees fund through $1 from each of their paychecks. After filling out extensive paperwork, getting approval from managers and submitting proof of their emergency, employees can receive a handwritten check from the corporate office. Trostel received $800 and a personalized note. “I was extremely surprised and so appreciative of the support that BJ’s gave us, not just from a manager level but from a corporate level,” Trostel said. “It was really nice.”

While this financial assistance program was not part of her decision-making process when taking the job more than a year ago, she said their help in her time of need “absolutely” impacts her performance and loyalty to the company.

Given the low unemployment rate in the United States and competition for talented, committed workers, companies are offering financial wellness initiatives that include traditional benefits like health insurance and 401(k)s, assistance with student loans, and even nontraditional benefits such as pet insurance. According to BJ’s careers site, the company offers many of these, including life insurance, pet insurance and identity theft insurance.

Given the lengthy hours spent at work, and with medical insurance and retirement savings being mainstays in corporate life, the prevalence of financial wellness programs is another example of employers becoming the financial home of employees, said Jeff Oldham, senior vice president of global and institutional markets at Benefitfocus, a benefits management software provider based in Charleston, South Carolina. Because the majority of employers are offering similar medical and retirement benefits, employers have to look above and beyond those to attract and retain core employees, he said.

Beyond retention and talent attraction, financial wellness tools aim to help employees’ physical health. Early stages of the financial wellness space began with physical wellness programs, Oldham said. While physical wellbeing initiatives remain popular and important, it’s nearly impossible for employees to feel healthy if they have a burden of a lack of financial stability, he added.

This lack of stability becomes increasingly apparent with student loan debt sitting at $1.4 trillion and the average American lacking substantial savings. One-third of all employees get distracted by their situation, causing 46 percent of them to spend at least three hours per week at work thinking about or handling finances, according to PwC’s “2017 Employee Financial Wellness Survey.” Additionally, those who are stressed by their financial situations cite health problems from said stress at a rate 15 percent higher than those who are not stressed. Finally, employees with financial stress are more likely to delay retirement, the survey said.

One result from this is that people work long after they want to in order to pay bills, said David Stedman, CEO of BrightDime, a financial wellness software provider based in Charlotte, North Carolina. While there is value for older workersin the office, they tend to carry higher costs in terms of health care and wages than young employees. It’s a win-win for both employers and employees if people retire when they are ready, rather than when forced to, Stedman said.

In the age of stagnant wages and increasingly high costs of living, employees could benefit from more money in general. However, if everyone suddenly earned more, the prices of goods would go up and thus make new wages effectively stagnant, said Sarah Newcomb, behavioral economist at Morningstar Inc., an investment research firm based in Chicago. Additionally, people earning six-figure salaries can also have credit card debt; they can still be spending too much and losing sleep at night if they haven’t mastered the fundamental financial competencies of keeping track and being conscious of emotions and motivations around money, she said. Newcomb believes there is often room to become financially well without a raise.

How to Do Financial Wellness

While financial wellness itself is extremely important, how people access it and improve their financial footing is secondary in importance, she said. Wherever employees feel safe learning about these topics is fine, whether that’s through their banks, employers or anonymous online forums; people simply need to know they won’t be shamed when asking questions, as money is a vulnerable topic, she said.

Many programs, credit counselors and apps aim to help people improve their financial situations, but Newcomb still finds that those who are at the most risk for financial crises and debt tend to not take the abundance of help available. “Even if offered for free, they are the least likely to take advantage of it.” This self-selection bias could be from a lack of free time or energy to seek out programs, or it could be on the financial institutions to better market their services.

One issue could be that many programs treat financial wellness as if there’s only math involved, when there’s actually many emotional and social factors as well, Newcomb said. Money management should be compassionate, nonjudgmental and nonmathematical.

Context is also important. “One of the biggest disconnects that I’ve observed in the financial advice industry is that a lot of times it’s people who have always had money and privilege and security trying to give advice to people who never have,” Newcomb said. In defense of its low wages, McDonald’s in 2013 created a budget for its workers that fell short on some basic understandings of how people spend their money; the budget lacked groceries, child care, realistic health care costs, clothing and more.

“C-suite people need to check their privilege a bit and if they’ve come from lower down the [economic] ladder, try to remember what it was like. If they haven’t, put the leadership in the hands of those who have,” Newcomb said.

To get the most out of financial wellness programs, BrightDime’s Stedman added that business leaders should make sure their initiatives follow five criteria:

Make sure advice is holistic and personalized. “It’s tough to provide pinpoint advice unless you know the holistic picture of a person’s financial situation,” he said.

Ensure there is continued engagement. Financial wellness needs to be a lifestyle in order to have long-term effects. If engagement is low, companies need to improve communication and marketing of their offerings.

Measure and show data on the effects of initiatives and third-party providers.

Keep the information aggregate. Privacy is important, so there should never be information about individual employees.

Finally, be sure vendors don’t have hidden agendas, such as wanting to sell other products. This will impact engagement among employees.

While there are many ways to help employees become financially well, Stedman emphasized that one size does not fit all. By helping each worker with their individual needs they will become more productive, creating a winning situation for employees and employers. “When they help their employees in this way, they’re also helping the company,” he said. But the reasons to help workers go a step further: “From a moral standpoint, I think there’s a great responsibility for all of us to help.”